Good morning

While the Gilead news was disappointing yesterday (even though we still need to hear details directly from the company as we don’t know the state of the patients that were given the drug), here is the results of testing the impact of sun, heat and humidity on the virus. //www.youtube.com/watch?v=Si2zlnz8Hao. Combining this with mask wearing and the distancing thing, we might actually get a respite this summer ahead of what will come in the fall where hopefully we’ll be much better prepared for.

Yesterday I wrote about ‘if you reopen, will they come.’ If you didn’t see yesterday the UAW said “At this point in time, the UAW does not believe the scientific data is conclusive that it is safe to have our members back in the workplace. We have not done enough testing to really understand the threat our members face.” It was expected that on May 4th many auto plants would be reopening. When the UAW spokesman who said this was asked whether workers would stay home on May 4th if the factories open, he said “We continue to have dialogue with the Detroit 3.” Reopening is not as easy as saying it’s time to reopen.

On the other hand, the non unionized Toyota plants, which consist of 14 in North America, will all reopen on May 4th with all the safety protocols of masks, face shields, temperature checks and distancing during work and breaks.

We know Sweden has been a grand experiment as they only initiated limited distancing (still no gatherings above 50 people and high schools and universities went online) and decided to never close. Still, many decided to stay home and they also told their elderly population to stay inside and many outside wear masks. Here is a chart of patient counts between Sweden and NY. Sweden doesn’t claim that it will be any better at preventing unfortunate deaths but believes it won’t be any different than other countries that have locked down. Obviously the comparison between NY and Sweden is not apples to apples because of density differences and I only highlight this to just show the different approaches being taken so we can learn from what’s working. 

I also include this 2nd chart of Austria in white where they began to reopen their economy on April 14th. 

The April German IFO business confidence index was poor not surprisingly with a print of 74.3 vs 85.9 in March and below the shot in the dark estimate of 79.7. That is a record low. The Current Assessment component fell to 79.5 from 92.9 while Expectations weakened to 69.4 from 79.5. The IFO said succinctly, “The coronavirus crisis is striking the German economy with full fury.” The euro is little changed here but still below $1.08. European bonds are bouncing with the Italian 10 yr back below 2%. We’re going to hear from S&P today on Italy’s credit rating.

Retail sales in the UK in March were soft but as expected and that month only captured part of the shutdown. The pound is also flat vs the dollar as are gilt yields.

Due to all to a spike in pharma production, Singapore’s March industrial production figure rose 16.5% y/o/y, well better than the estimate of down 4.9%. Pharma production spiked by 127% y/o/y and if you take this out, IP was about flat. The Singapore Economic Development Board did say that this March figure wasn’t impacted much by the global shutdowns and April will be more affected. The Singapore Straits index was down 1%.

In response to the Nikkei news story yesterday that the BoJ was considering shifting to unlimited money printing, the 10 yr JGB yield fell back below zero. How they have not learned the lesson of the damage done to its banking system that is dying a death by a thousand cuts due to no yield curve is a complete mystery. The yen though is little changed and the Nikkei closed lower by .9%.